Coordination Mechanism For Closed-loop Supply Chain Based On Game Theory

Recently, with the strengthen of the environmental protection, the increasingly fierce of the market competition and the increasingly perfecting of environment laws in most countries, the used product recovery has been required by many countries for manufacturers, and there are other foreign enterprises start to take the returns management and the recovery of the used product as a new competitive mode and a effective way to reduce cost. The manufacturers all of the world are facing a great challenge to transform the developing mode from tradition to recycling economy. To solve this problem, the single enterprise seem to be helpless and the integration of the suppliers, the manufacturers, the retailers, and the coordination and cooperation between the recovery and retreatment merchants turn to be imperative, which needs to integrate the forward and backward supply chain and the closed-loop supply chain (CLSC), which is different to the traditional supply chain, is forming.The games theory has been used in this article to analyze the low price strategy and coordination mechanism of closed-loop supply chain. By the comparative analysis of the centralized and decentralized decision-making for the recovery mode, we can found that:the whole profit will be decreased and the system efficiency is lower. So a RES contract is constructed so ensure the whole profit is up to the one of the centralized decision-making, the profit which the supply chain enterprises get with coordination is more than the one with no coordination. Finally, the retail price is decreased and the sales volume increases.For electronic commerce, a game model of channel conflict is constructed in the decentralized decision-making based on the games theory. Analyzing the pricing strategy of manufacturers’recovery mode, we can come to the conclusion:coordination between the members of the supply chain will make the whole profit increasing. Based on the analysis above, this article has a study on the supply chain, which includes a manufacturer possesing a electronic commerce direct sales channel and a traditional retailer, and have a elaborate description of the coordination problem of the supply chain members with a stable market demand and each income of them when they accomplish the market pricing independently. Furthermore, this paper has dealt with the double channel conflict problem by quantity discount model, and has proved that the electronic direct selling channel of the manufacturer is not necessarily harmful to the traditional seals channel. The cooperation between the electronic and traditional seals channel will make the whole profit increase.In the end, the implementation of the coordination mechanisms for the closed-loop supply chain has been illustrated simply, which has a positive significance to improve the whole competitiveness and is helpful for the construction and management of the manufacturer’s electronic commerce channel, and the profit of the whole supply chain will increase at the same time.